Bloomberg Turns Over His Next Campaign to Blagojevich's Ex-Deputy

When Mike Bloomberg named Bradley Tusk to run his $80 million re-election campaign in December, the mayor took pains to explain that his new 35-year-old hire was not tainted by his most prominent prior employer—Illinois Governor Rod Blagojevich, who had been arrested just three days earlier.

Tusk "never had anything to do with parts of that administration," Bloomberg told the Times. He knew this, he explained, because Tusk, Blagojevich's first-term Deputy Governor, had told him so, bringing it up himself "to make sure we were aware of the issues" before he was given the all-powerful campaign manager post.

Since Bloomberg made that announcement, he has derisively dismissed press questions about the campaign as if it were unconnected to him. The message from him is clear: The self-vetted Tusk is now in charge, handpicking, for example, the most expensive collection of advisers ever assembled under a single city campaign.

That team of seasoned consultants, including the face of Hillary Clinton's presidential campaign, Howard Wolfson, now all report to the youthful Tusk, who has never worked on a campaign, even at the most junior level. Tusk's career—other than his four years as Blagojevich's top aide—consists of five years of leash law and litter policy at the New York City Parks Department, two years as a spokesman for Senator Charles Schumer, one year as a low-level adviser at the start of Bloomberg's first term, and nearly two years as a lobbyist for another 2008 debacle, Lehman Brothers.

Since the Blagojevich job is Tusk's only significant managerial experience, it oddly becomes the rationale for his hire, an uncomfortable reality for a mayor known to pick the best talent available. Having shunted aside Kevin Sheekey and Bill Cunningham, who steered Bloomberg's prior campaigns, the mayor settled on Tusk, says Wolfson, because he wanted "a fresh perspective." (Maybe it's the mayor who's grown stale.)

Tusk is now in charge of an operation that has promised—on the front page of the Times, no less—to spend $20 million on attack ads against anyone who dares get in the way of the mayor's trifecta. While many New Yorkers will never come to know who Tusk is over the course of the coming months, his message for Mike will be coming at us in our living rooms and mailboxes at a peak rate of millions of dollars a week.

If Tusk succeeds, his strategy will shape the city's public life for the next four crisis years. He's not the mayor, of course, but he is, right now, the second most important player in our politics, orchestrating the frontrunner's every move, dispensing a fortune in a time of scarcity, studying the best polls about our fears, and guiding our fingers invisibly toward whichever column carries Bloomberg's name on November's ballot.

That's why it's important to know all about the last sale Tusk made: helping to re-elect Rod Blagojevich in 2006 from his post at the helm of Blagojevich's government. And that's why Bloomberg's embrace of him—without any independent examination of his record in Illinois—raises questions about a mayor who increasingly appears to act and speak on impulse, having traded in the open mind for thoughtful detail that characterized him when he first ran for mayor.

Unlike so many other onetime Blagojevich supporters, Tusk has yet to say one critical word about the former governor. Though communications jobs have been a big part of his biography, he doesn't talk to the media now, an indication, perhaps, that there are too many questions that he prefers not to answer.

The Voice submitted several broad questions to Wolfson, and he eventually e-mailed a partial reply. He said that Tusk had done "policy, budget, operations, legislation, and communication" for Blagojevich, not "procurement, appointments, hiring, or grants," a separation so artificial that no one who has ever spent a day at a top executive level in a large government would make it. This story shows how misleading that answer is, and how the Blagojevich experience compromised the young Bradley Tusk.

The Chicago Sun-Times compared Tusk to Karl Rove, the Tribune called him "the center of gravity," Crain's said he was "as inside as you can get," and Republican State Senator Kirk Dillard called him a "junkyard dog protector of the governor" with "immense power and influence."

"Love him or hate him, Tusk was your governor in the first term. He made everything happen, and those of you on this committee who knew him knew that to be true," wrote Bob Arya in a nine-page letter to the Illinois House impeachment panel recently. Arya is an Emmy-winning television journalist who has covered Blagojevich and became his communications director shortly before Tusk left.

Even Tusk was less modest than he is now about the scope of the job that lured him away from Bloomberg's City Hall in 2003: "If anything, it ended up being bigger than I expected," he said in a departing interview at the end of 2006. "I don't know of any policy decisions that got made without me involved." And perhaps more disquieting, as late as 2005, he was telling reporters he was "pretty dedicated to this guy," adding that he and Blagojevich had "hit it off so well."

Over its six-year life, the Blagojevich administration delivered "direct benefits," according to the House special impeachment report, to 75 percent of the 235 donors that gave exactly $25,000 to the campaign. The report defined these benefits as contracts, appointments, and "favorable policy and regulatory actions." Many of the donations, the committee found, "were made shortly before or after the receipt" of benefits. Those who exceeded the $25,000 "pay to play" entry fee—a description of the government freely offered by editorial boards while Tusk was at the helm—did even better: "Benefits were given to donors who made the highest contributions," the report said, "rather than to individuals or companies who were more deserving."

It's hard to imagine that Tusk, an alert and 12-hour-a-day man, was unaware of this mire all around him, even as he spearheaded health care and education funding initiatives that became the keys to Blagojevich's 2006 re-election.

By the November night two years ago, when Tusk was celebrating at Blagojevich's victory party, half a dozen of the governor's closest sidekicks and fundraisers had been indicted or pled guilty, and the campaign had paid more than $700,000 on Blagojevich's behalf to the same law firm that represented his convicted predecessor.

Yet Tusk was jubilant, "vindicated," said one of his friends who accompanied him there, Elliot Regenstein.

The infamous wiretapped Blagojevich statements that appear to show him auctioning off Barack Obama's Senate seat have left most people thinking that the federal investigation of the impeached governor is focused only on that grimy episode.

Actually, the criminal complaint against Blagojevich begins with the words: "From in or about 2002 to the present," Blagojevich "participated in a scheme to defraud" the state.

The first 31 pages of the 76-page arrest affidavit recount events that occurred while Bradley Tusk was at the helm of the government and notes that the government began the probe in 2003. When Blagojevich is actually indicted in April, the case against him is likely to feature many charges that reach back to the Tusk years.

The Bloomberg campaign claimed a couple of months ago that Tusk had never been questioned, much less implicated, in the investigations—by either federal or state officials—of Blagojevich. But the Voice has obtained a copy of his June 22, 2006, interview with the state's Auditor General, William Holland, which establishes his culpability for a flu vaccine program that the state itself conceded, when sued by an unpaid vendor, was illegal.

Wolfson says now that Tusk isn't "familiar with the report" and doesn't recall the interview by Holland investigators. Illinois newspapers also reported in 2005 that Tusk's records had been subpoenaed by state prosecutors, who declined to answer any Voice questions about whether Tusk was quizzed or what documents he provided because, their spokeswoman said, it was a grand jury subpoena. That's the limit of what's known about Tusk as a subject of investigative interest while he was in office.

Since Bloomberg's assertion in early December, however, the impeachment report formally charged Blagojevich with running two Tusk-conceived-and-directed programs—the flu vaccine and the importation of Canadian drugs—that "violated" numerous federal and state laws and, in the case of the importation effort, "exposed" participants "to federal criminal sanctions." The report names Tusk, concluding that the vaccine program, which it said was executed in "utter disregard" of the law, "implicates the highest-ranking officials in the Governor's Office, including the Deputy Governor."

In a letter to U.S. Attorney Patrick Fitzgerald, written just eight days after Tusk's campaign appointment was announced by Bloomberg, the impeachment committee included him on a list of 15 former Blagojevich staffers it wanted to subpoena. Fitzgerald objected, asking the committee not to question any of them, including Tusk, because it "could significantly compromise the ongoing criminal investigation." A spokesman for the office declined to explain how questioning Tusk might interfere with their inquiry because the answer is "outside the public record." What's undisputed is that Tusk never contacted Fitzgerald and offered what he knew about the inner workings of Blagojevich's government, even after this December's bombshell bust.

Fitzgerald's criminal complaint against Blagojevich alludes repeatedly to a Blagojevich flight aboard a chartered private plane to New York in 2003 that Tusk helped organize and that included a press conference with Bloomberg about the drug importation program. Five of the seven people aboard—excluding only Tusk and Blagojevich's bodyguard—have since been charged with federal crimes, and all but the former governor have pled guilty. Tony Rezko, the infamous financier and Blagojevich bagman who was convicted last year, appeared on the manifest for the trip, but didn't show up.

At one point during the trip, Tusk left his seat across the aisle from Blagojevich and gave it to Joseph Cari, a major national Democratic fundraiser new to the Blagojevich circle, according to court documents. Cari, who became the first of the gang to plead guilty to kickback charges in 2005, later testified that the governor immediately began to recruit him to participate in the governor's broad pay-to-play campaign-finance scheme.

Tusk's presence on the trip—which included three fundraising events that raised $75,250 from New York area donors—became a focal point of the Blagojevich critique during the 2006 re-election campaign. Wolfson declined to say if Tusk attended the New York events or met donors, as flight schedules indicated he would. Joe Birkett, the DuPage County State Attorney who was the Republican candidate for lieutenant governor, charged that mixing top fundraisers "with a high-ranking member of the governor's staff" was "setting the table to exchange your government decisions" for "political benefits." Democratic legislator Jack Franks told the Voice that Tusk's appearance on the trip was "highly inappropriate," noting that Blagojevich's staff was "enabling him" to blur "the line between state and political business."

When Cari and the fundraiser who paid for the trip, Stuart Levine, the Blagojevich appointee to two state boards, pled guilty in separate federal cases that tarred the governor without indicting him, the press and the Republicans dubbed the flight "the Shakedown Shuttle." The indictments spelled out the criminal conversations that occurred on the trip, and Blagojevich's 2006 Republican opponent, State Treasurer Judy Topinka, taunted him with it.

Topinka assailed Tusk's presence on the shuttle in a Voice interview and linked the media explosion about it in 2006 to his departure. "I don't think the man is stupid," said Topinka, contending that "if he stuck around," he might have been "sucked into a whirlpool" that has consumed Blagojevich. Edwin Eisendrath, the former Chicago alderman who ran against Blagojevich in the Democratic primary, said: "It's unimaginable that Tusk didn't know about the corrupt selling of public services."

The other connection Tusk has with the federal complaint is his longtime friend and sponsor John Wyma.

Wyma is the reason the feds were finally able to obtain court orders and install wires on Blagojevich's campaign committee and home in October. The lobbyist closest to Blagojevich, he'd been flipped by the feds as part of a possible immunity deal. Wyma was also on the same list of impeachment witnesses as Tusk.

By Tusk's own account, it was Wyma who first introduced him to Blagojevich in 2001 in a Washington restaurant, when Tusk and Wyma, Blagojevich's former top aide in the House, were working as aides to Schumer. Wyma helped run Blagojevich's first campaign for governor in 2002, while working for a Washington lobbying company, and started signing up lobbying clients for his own firm in Illinois as soon as Blagojevich took office. Two months later, the new top lobbyist in town persuaded Blagojevich to hire Tusk as a 29-year-old Deputy Governor, an odd pathway to power for a supposedly "good-government" recruit.

Caleb Weaver, who says he was hired by Tusk to run the drug importation program (I-Save-RX), recalled being introduced to Wyma at the 2004 staff roll-out meeting for the program run by Tusk and Blagojevich. Regenstein recalls Wyma being the only lobbyist at a critical 2006 budget discussion with Tusk and Blagojevich. Wyma was such an inexplicably integral part of the Blagojevich administration that he used the governor's wife as a broker when he bought a $650,000 condo from one of his lobbying clients, a tollway contractor who won a $2 million, no-bid deal the day before he paid her up to $39,000 in commissions.

Wyma's client list in Blagojevich's first year was up to an impressive 25, but it continued growing to 67 by 2006. The Tribune found that Wyma's clients, and those of the four other lobbyists close to Blagojevich, contributed $5 million to the governor by the time Tusk left the payroll in early 2007. Before he left, Tusk lined up a job with Lehman Brothers, which had long paid Wyma more than any of its other outside lobbyists reported on public forms ($25,000 a month). It landed $1.3 billion in no-bid state bond work, most of it also tied to the tollway authority.

Tusk became Lehman's in-house lobbyist, traveling the country trying to get states to privatize their lotteries, an initiative he'd helped launch in Illinois. Lehman was certainly interested in bidding to buy the Illinois lottery, but the legislature blocked Blagojevich's attempted sale of it. Wolfson told the Voice that Tusk got clearance from Illinois ethics officials to do Lehman work on the privatizing effort there, "but chose not to anyway." A Barclays spokeswoman, speaking on behalf of the former Lehman official who hired Tusk, said that it was a corporate condition of his employment that he "not do Illinois work." With no state privatizing its lotteries, despite Tusk's hiring of top Republican operatives to influence Republican governors, his time at Lehman is such a negative that Wolfson simply referred to it as Tusk's "private sector experience."

Two other Wyma clients, GTECH and IGOR, were widely reported to be the leading potential beneficiaries of another Tusk-driven lottery initiative designed to fuel increased school funding: the introduction of a keno game, which Tusk likened to bingo. GTECH, a commercial gaming technology company with a scandal-ridden history across the country, did extensive work with Blagojevich officials to develop the keno proposal, which Tusk pushed in several news stories as a budget-balancing revenue source.

Already receiving $27 million a year for running the Lotto game, GTECH was described in news accounts as having "an enormous advantage" over other bidders, in part because it helped draft the keno bid. In one example of how a policy pronouncement could benefit a lobbying client, Tusk publicly declared that instituting keno "doesn't even require" legislative approval, but House Democrats blocked it. IGOR, whose principals contributed $76,000 to Blagojevich, had the lottery ticket distribution contract.

If Tusk's school-funding efforts were one of his major initiatives, his most ballyhooed achievement, celebrated by him when he did his farewell interviews, was the All Kids insurance program, which made health care available to any family who applied on a sliding income scale. As laudable as the effort might have been, even it could not escape Wyma, whose client, Wellcare, appeared almost immediately at a vendor conference for a new All Kids contract and was depicted in the media as a prospective beneficiary.

Six days after Blagojevich signed the All Kids program into law, five Wellcare affiliates gave a total of $100,000 to Blagojevich. The Tampa-based company, which was raided by 200 FBI agents in 2007, already had a $75 million Medicaid contract with Illinois and had donated $25,000. Todd Farha, Wellcare's former CEO, told an earnings conference in mid-2006 that the Blagojevich administration had agreed "to ensure that we are one of the options available to Medicaid recipients as they consider enrollment" in All Kids (its Illinois payments doubled by 2008).

The program was launched in late 2005, simultaneous with Blagojevich's re-election campaign. When federal subpoenas unrelated to All Kids or Wellcare were issued the day Blagojevich unveiled it before a joint legislative session, Tusk was so frustrated that he lashed out at reporters: "If we could take one day to focus on an actual substantive problem and a solution to deal with it," he said, "instead of constantly talking about scandal, I think it would be a productive thing to do." The biggest donors to Blagojevich's campaign kitty during the second half of 2005 were health care and related companies, which kicked in $290,000.

Throughout the campaign in 2006, Blagojevich and his wife went from county to county to announce how many children had enrolled in the All Kids program. As Regenstein put it, "All Kids was obviously a central piece of the re-election campaign. It was the first thing Blagojevich mentioned in the victory speech." The program fell 270,000 children short of insuring all kids and can't pay for covered kids now.

Regenstein, who worked with Tusk in the New York Parks Department in the late '90s and was recruited by him to become Blagojevich's education adviser, said that Tusk and Wyma "had dinner with some regularity" throughout the Blagojevich years and remained "social friends." Yet, when pressed about him by reporters, Tusk claimed: "I don't think John is different from any other lobbyist in Illinois," attributing his success to his knowledge about how the process works. Wolfson says now that Tusk "had little interaction with John in his professional capacity"—which implicitly acknowledges that he was lobbied by him—and, even more surprisingly, adds that in Tusk's view, "he remains a friend."

Even Regenstein, whose office was next door to Tusk's, had his own frustrations about Wyma and was forced to explain to reporters the handling of Harcourt Assessment, which hired Wyma after it was tentatively awarded a $42.8 million testing contract by the State Board of Education, which Regenstein oversaw. Harcourt was concerned that a new Blagojevich majority on the board would re-bid it. The contract survived, and Harcourt's spokesman said, "I don't know whether Wyma had an impact or not." The company's performance was blasted two years later, even by Regenstein.

Blagojevich and Tusk came to New York in 2003 and 2004 to do press conferences with Mike Bloomberg about the flu vaccine and drug importation plans that later became a focus of the impeachment report.

It was certainly Tusk who reached out to NYC officials about a feared national shortage of flu vaccines, later telling investigators that he felt "if more people were involved, including governments from both parties, it would be harder for the FDA to say no to importing the vaccine" from Europe.

You'd think Bloomberg would have remembered that both of the projects Tusk brought to him from Illinois bombed. In fact, the European pharmaceutical supplier, Ecosse, that secured hundreds of thousands of doses of vaccine for Illinois and New York, but couldn't get them into the country, filed a claim against the city as recently as 2007 for $2.1 million. The impeachment report, echoing the 2006 findings of the Auditor General, says it was "the governor's office," meaning Tusk, that ordered 200,000 doses for New York.

No one takes the Ecosse claim very seriously, though a city health department official, Dr. Moupali Das-Douglas, authorized Illinois to get the vaccines in a November 2004 e-mail. A department spokeswoman told the Voice that it was the city's "understanding" that Ecosse "would secure" an FDA waiver, but that "proved incorrect," so it "did not go forward" with the purchase. Dr. Das-Douglas says, "The information from Illinois did not pan out." Either version suggests that Tusk and his people were not exactly straight with Bloomberg and his.

Unlike Illinois, New York never signed a contract with Ecosse, instead getting the needed vaccine from the Centers for Disease Control (CDC), which, according to the impeachment report, "had located enough vaccine for Illinois' priority population" as well. Yet "despite the fact that the state was going to receive all the vaccine it needed from the CDC," observed the report, the governor's office "actually increased the amount it sought by 74,000 doses." Tusk boosted the order when he already knew "that the vaccine would never be delivered"—informed by an e-mail addressed to him—because the FDA had "indicated it wouldn't approve the importation."

An Ecosse suit for $2.6 million against Illinois is still pending in Illinois, but the absence of a contract in New York has forestalled a suit here. As Wolfson argued in his e-mail to the Voice, the vaccine hunt started when the country momentarily panicked about a shortage. But by the time a deputy who reported to Tusk signed the contract in January 2005 (contrary to Wolfson's demarcation), the only thing he and Blagojevich were chasing was headlines, depicting the governor (who still had larger ambitions) as some sort of national hero.

The impeachment report was just as harsh about the importation program, concluding that Blagojevich and his staff "did not adequately inspect foreign pharmacies, did not ensure that only approved foreign pharmacies were filling the prescriptions, and never tested the drugs for safety." Run by Seth Webb—another former Parks Department friend of Tusk's, whose office was on the other side of Tusk's (opposite Regenstein)—I-Save-RX was launched even after the FDA "warned" state officials that it was "in direct conflict with federal and state law." Despite Bloomberg's press conference endorsement of the program, New York never joined it.

In addition to the illegality of I-Save-RX, a Chicago marketing firm, Jasculca/Terman & Associates, was paid $300,000 by the Canadian company selected by Tusk aides to run the program. Jasculca/Terman, which also had $1.6 million in direct state contracts for other marketing efforts that involved Tusk and Webb, donated more than $103,000 to the Blagojevich campaign, including tens of thousands in promotional services. It also coordinated the second inaugural.

Tusk and Webb were also involved in one other Illinois program that overlapped with the Bloomberg administration: the marketing of the state's name and selling of corporate sponsorships, resulting in a contract with Pepsi similar to the one Bloomberg did with Snapple. The Illinois and NYC marketing programs were announced at the same time—in September 2003. Hired as the director of special projects in Tusk's office, Webb developed and oversaw a corporate sponsorship contract with Team Services, LLC, which was supposed to generate up to $300 million in three years. The Sun-Times reported in 2008 that the firm—which was owned by a Blagojevich donor and former business associate of Blagojevich's chief of staff—actually generated $1.1 million and charged the state $820,000, "netting a paltry $315,000."

Last March, the legislature unanimously asked the Auditor General to probe the Pepsi deal, which was completed after Tusk's departure. Coke claims it wasn't allowed to make its final offer, and Pepsi was an early and large Blagojevich donor. Webb's current bio claims that he "created the beverage vending agreement"—he left as soon as it was done.

The "pivotal moment" in Blagojevich's re-election campaign, according to Regenstein and many observers, was when State Senator James Meeks—whose 22,000-member church and close alliance with Rep. Jesse Jackson Jr. make him a force in Illinois politics—announced he would not run as a third-party candidate. The May decision followed extensive discussions involving Meeks, Jackson, Tusk, Regenstein, and Blagojevich himself. Jackson reported in his newsletter that Tusk used him as an intermediary, telling him that Blagojevich would negotiate directly with Meeks so long as tax increases weren't on the table.

The key to the eventual deal would drive Tusk's life in and out of Illinois for the next couple of years: the sale of the state lottery, which financial advisers told Tusk could net the state $10 billion. "Bradley and I were working with Meeks," says Regenstein. "We knew what the stakes were." Republican candidate Topinka called it a "backroom deal" and a "shell game." Since none of it ever materialized, she may well have gotten that right.

Regenstein tries to put some perspective on his and Tusk's efforts: "We knew the governor had flaws. We knew all this was going on, but we had no way of knowing if the accusations were true or not. Brad always said to me, 'How many people did we help?' We were trying to stay focused on policy." Webb was more defiant: "Pay-to-play was not something I was responsible for. Why should we talk about it?" he asked.

Tusk is counting even now on his multitasking competence and apolitical veneer to save him from his Blagojevich baggage. But Regenstein acknowledges that Tusk "did go over to the campaign headquarters" and "was involved in consultations" with campaign press and other staff. Aware, no doubt, that the feds were everywhere, when Tusk got campaign calls on his personal cell phone, says Regenstein, he would leave his office in the government center and "go to common space" in the building so he was not doing campaign work "on government time."

In addition to Tusk, Bloomberg and Blagojevich have shared the same campaign media consultant, Bill Knapp of Squier Knapp Dunn (SKD), in every big race they've ever run, including Bloomberg's current one. SKD also did Joe Lieberman's campaign in 2006, and Lieberman and Blagojevich were the only two Democrats that Bloomberg endorsed that year. Bloomberg even hosted a fundraiser for Lieberman in Chicago. Knapp did not return Voice calls, but SKD may well have been a voice in Bloomberg's ear pushing the Tusk hire.

Bloomberg must believe, like Regenstein, that Tusk was trying to do good even as he captained a ship awash in pirates, none more predatory than his own land-based commander. It was a career deal Tusk made with himself, a rationale he could live with, one more message he was confident he could sell. Now, a city facing its own storm must decide if he is good enough to steer this government's electoral flagship—if we can believe what his campaign tells us about his new candidate—or if he has sacrificed too many pieces of himself to be so central to our lives.